Suzlon completes sale of German subsidiary Senvion, nets Rs 7,000 cr

The company will use proceeds to retire debt and expand business

Suzlon has concluded the sale of its German subsidiary Senvion to US private equity firm Centrebridge for Euro 1 billion (about Rs 7,000 crore), the wind turbine maker announced on Thursday.

The company will use the proceeds to retire its debt and expand business. It will also earn Euro 50 million (about Rs 350 crore), conditional to meeting certain performance criteria. On January 22, Suzlon had signed a binding agreement with Centrebridge to sell Senvion, which contributed about 65 per cent to its consolidated revenue.

The sale was followed by an investment of Rs 1,800 crore in Suzlon by Sun Pharma Chairman Dilip Shanghvi and his family for 23 per cent stake.

“In the recent past, we have taken some transformational steps, aligned to our strategic vision. By this step, we have demonstrated our strong commitment to our lenders, who have been hugely supportive to us. The successful completion of the Senvion sale paves the way for the group to ramp up volumes rapidly. We are in a strong liquidity position to tap the opportunity available in India and other emerging markets, as well as in the US,” said Suzlon Group Chairman Tulsi Tanti.

Suzlon’s sale of Senvion was aligned with the group’s strategy to reduce debt and focus on the home market, high-growth markets such as US and emerging markets such as China, Brazil, South Africa, Turkey and Mexico, the company said. Suzlon’s overall debt stands at Rs 16,500 crore. The company will use about Rs 6,000 crore from the Senvion sale to repay loans, while Rs 1,000 crore will be used to fund operations.

It has issued foreign currency convertible bonds valued at Rs 3,000 crore, which it hopes will be converted into equity next year.

At the time of signing the agreement in January Suzlon had a total debt of Rs 16,500 crore. The sale has helped Suzlon to raise Rs 7,000 crore in cash and will use about Rs 6,000 crore to repay debt and balance amount to fund operations.

In January Tanti had said Suzlon will be making profit in the next financial year. "Our interest cost will reduce, sales volume will go up. Our break-even level has come down and we expect the cost structure to improve further," he had said.